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SMALL BUSINESSES ACCESS TO HEALTH

INSURANCE: LESSONS FROM NEBRASKA?

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JUNE 6, 2005

Serial No. 109–19

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

(II) 

C O N T E N T S 

WITNESSES

Page 

Green, Ms. Peggy, President/CEO, Green’s Plumbing, Heating, Cooling and 

Remodeling ........................................................................................................... 4

Lanik, Mr. Bob, CEO/President, St. Elizabeth’s Regional Medical Center ......... 6

Janssen, Mr. Charlie, Chairman/CEO, RTG Medical ........................................... 8

Durham, Mrs. Debi, President, Siouxland Chamber of Commerce ..................... 10

Miller, Mr. John, President, Oxbow Hay Company .............................................. 12

Moline, Mr. Robert, CEO, HomeServices of Nebraska ......................................... 13

APPENDIX

Opening statements: 

Manzullo, Hon. Donald A. ................................................................................ 22

Fortenberry, Hon. Jeff ...................................................................................... 24

Prepared statements: 

Green, Ms. Peggy, President/CEO, Green’s Plumbing, Heating, Cooling 

and Remodeling ............................................................................................. 26

Lanik, Mr. Bob, CEO/President, St. Elizabeth’s Regional Medical Center . 29

Durham, Mrs. Debi, President, Siouxland Chamber of Commerce .............. 35

Miller, Mr. John, President, Oxbow Hay Company ....................................... 38

Moline, Mr. Robert, CEO, HomeServices of Nebraska .................................. 41

Attached: 

Seng, Hon. Coleen, Mayor, Lincoln, Nebraska ............................................... 46

(III) 

(1)

SMALL BUSINESSES ACCESS TO HEALTH 

INSURANCE: LESSONS FROM NEBRASKA? 

MONDAY, JUNE 6, 2005

HOUSE OF REPRESENTATIVES

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Committee met, pursuant to call, at 11:05 a.m., at the 

Cornhusker Hotel, 301 South 13th Street, Lincoln, Nebraska., Hon. 

Donald A. Manzullo [chair of the Committee] Presiding. 

Present: Representatives Manzullo and Fortenberry. 

Also Present: Representatives Osborne and Terry. 

Mr. MANZULLO. We know the gavel works. Welcome to our hearing here. I don’t know if you’re going to have enough chairs. 

Mr. FORTENBERRY. That’s a good problem. 

Mr. MANZULLO. We need to have the chair committee bring in 

more chairs. 

I am Congressman Don Manzullo from the 16th District of Illinois, chairman of the small business committee. And we have been 

having hearings literally all over the country on the issue of affordability of health care. 

One of the outstanding members of our committee is Jeff 

Fortenberry, your congressman from Lincoln. Now let’s all give him 

a nice round of applause. 

[Applause.] 

Mr. MANZULLO. Let me say it’s a real pleasure to have Jeff as 

a member of the small business committee. He’s one of those members that shows up quite a bit, asks all kinds of questions, causes 

all kinds of trouble, which is good because you didn’t send him to 

town just to sit there but to raise the hackles of the people that 

are trying to make a policy. 

Here are the rules. The witnesses will speak for five minutes. I 

am going to be the timekeeper. And when I go like this, that’s four 

minutes. Okay? When I am getting ready to do this, all right, I’ll 

bet that’s five minutes. And those are the rules on it, and I am 

going to turn the table over to Congressman Fortenberry. 

[Chairman Manzullo’s opening statement may be found in the 

appendix.] 

Mr. FORTENBERRY. Thank you so much, Mr. Chair. What a privilege we have today in welcoming Chairman Don Manzullo to join 

us for this official field hearing on the house small business committee. Chairman Manzullo is from northern Illinois, the 16th District. He lives in the town of Egan. We are desperately trying to 

find a map to figure out where that is because 39 people live there. 

He won’t tell us. 

2

Welcome, Mr. Chairman. Thank you so much. We are glad to 

have you in Nebraska. We are also joined by my colleague, the Second District representative, Congressman Lee Terry. Thank you, 

Mr. Terry, for being here today. We appreciate all of your willingness to come out today and talk and hear about this important 

topic of health care coverage and small business. 

And, Mr. Chairman, everywhere I go, this topic does come up. 

We are very happy that you are here to address it with us because 

we know you have significant interest in this issue as well. 

So as I mentioned today, we will examine the issue of small business and health care coverage, health care costs, as well as employees who are affected by this. 

Small businesses represent the heart of entrepreneurship. Small 

businesses, including family farms, is where most families are trying to get a little bit ahead in life. Products are made and delivered 

with the imprint of a real person where workers and owners can 

most directly take responsibility for production and service and receive the full fruit of their labor. 

Often closer to their customers, small family owned businesses 

often see opportunities in niche markets and provide personalized 

service. Small business is the key to long term economic well-being 

for families, and that’s why I am so privileged to be a part of this 

important committee in Congress. 

For every single large corporation in America, there are 300 

smaller ones. These smaller companies employ half of the total private work force and consistently produce around 75 percent of the 

new jobs in the country. 

I believe we should seek to reward this efficiency and dynamism 

encouraging the creative entrepreneurship that the risk takers undergo. Yet as I often talk to small business owners or budding entrepreneurs a consistent concern arises, how to deal with the cost 

of health insurance. The rising cost of providing health coverage for 

employees is a growing obstacle for many small business persons, 

as you’re well aware, or those who may wish to join their ranks. 

Insurance premiums for small businesses doubled between 1994 

and 1999, a much more dramatic rise than faced by large other corporations. It’s no surprise that only 63 percent of smaller companies can even afford to offer health insurance, one reason that 

three out of five uninsured persons in our nation are either small 

business owners, employees, or their families. 

A decade ago government regulation was most often listed as the 

single most important problem that small businesses face. Today 

the cost and availability of health insurance is the top complaint. 

Some 30 percent of small businesses fear this more than anything 

else. This fact discourages the creation of small businesses, keeps 

them from hiring, and limits those who can attract—limits who 

they can attract to work for them. 

Of course, a number of innovative solutions have been proposed, 

and it is important that we promote those that make the most 

sense to hard working Americans in the small business communities. 

Some proposals would seek to provide relief to small businesses 

by the tax code, including additional measures of support for health 

savings accounts as an example. By involving consumers more diVerDate 0ct 09 2002 15:57 Oct 21, 2005 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 G:\HEARINGS\23175.TXT MIKE
3

rectly in medical decisions, the rising costs may be mitigated and 

insurance savings achieved. Also, better use of technology for medical administration, as well as loss of abuse as to foreign measures 

can also reduce costs. 

You get used to this in Washington. I will try not to ramble, Mr. 

Chairman. 

America provides the finest health care in the world, and yet rising costs to a growing number of younger workers are scared of the 

expense and opt out of the system of insuring themselves. 

[Congressman Fortenberry’s opening statement may be found in 

the appendix.] 

Again, I thank you all for joining us today for this important discussion, and I am especially grateful to our witnesses who have 

come from all across the First District of Nebraska. I look forward 

to your testimony, and, Mr. Terry, if you would like to make an 

opening comment, then I will proceed with introductions of our 

panel. 

Mr. TERRY. Very good. Thank you, Congressman Fortenberry, 

and let me just start off with complimenting you in putting together this field hearing and getting the esteemed chairman of the 

small business committee to our great state. He is your chairman, 

and he is my friend. In fact, we are neighbors. 

Mr. MANZULLO. Illinois hasn’t had much to crow about. I observed there was something going on in this city. 

Mr. TERRY. Yes. If you need to attend the football 101 clinic, as 

we know somebody from Illinois may need instruction. 

But, Jeff, you’ve done a good job in putting this hearing together. 

On the drive down here studying your panelists, it’s an impressive 

panel that you have here. I think it’s going to cover a wide variety 

of Nebraska’s economy and interests. And so, Mr. Chairman, I 

think you will learn a lot. We are a small business state, ag-based 

economy, but small business especially. That’s what drives us. 

Yes, we have Fortune 500 companies located in Nebraska, but 

even those companies started as Nebraska’s small businesses and 

grew, some very large with lots of railroad tracks and other assets, 

but nonetheless, locally grown companies. That’s the heart of Nebraska. 

So to the panelists the Fortenberry team has impaneled here, 

thank you for spending your day with us. You are an important cog 

in democracy here so that we can learn of your issues, your ideas. 

And most good ideas—I had to admit this to a student group. We 

actually have a young group of boys in the back and some college 

students attending here. I had to admit to them that congressmen 

don’t come up with all of the good ideas, although we claim it. They 

start with panelists like you that offer testimony and your time 

and talents before us. So thank you for this. 

Jeff, I will turn it back to you, Acting Chairman Fortenberry. 

Mr. FORTENBERRY. Thank you, Mr. Terry. Again, we appreciate 

your input today. 

I will introduce the entire panel. And, Ms. Green, if you will 

start. We have with us Ms. Peggy Green, President and CEO of 

Green’s Plumbing and Heating here in Lincoln. Green’s Plumbing 

and Heating was founded in 1921 by your grandfather. Welcome. 

4

We also have Bob Lanik. He is president and CEO of St. Elizabeth’s Regional Medical Center here in Lincoln, 242 bed hospital, 

90-person physician network. And Mr. Lanik has been the CEO for 

20 years now, I understand. 

Mr. LANIK. Yes, sir. 

Mr. FORTENBERRY. Welcome. Mr. Charlie Janssen is also with us. 

We’re glad to have Mr. Janssen here. He is CEO/chairman, I believe founder as well, of RTG Medical. They employ 39 people in 

Fremont, founded in 2001. Welcome. 

Ms. Debi Durham is here representing the—she is president of 

Siouxland Chamber of Commerce working on some innovative 

ideas in the area of health care coverage for the Siouxland region. 

You reside in Sioux City, Iowa, but as we call South Sioux City and 

Sioux City, we call it the neighborhood. Welcome. 

Mr. John Miller is here. He is president and founder of Oxbow 

Hay Company. Oxbow is located in Murdock, Nebraska, a small 

but important community in the First District of 250 people. John 

hired his first employee seven years ago and now has 40, turning 

a former grain farm into a thriving export of specialized agricultural products. So Oxbow is an exporter of specialized agricultural 

products. Welcome. Thank you for coming today. 

Mr. Robert Moline is CEO of HomeServices of Nebraska. They 

employ 600 real estate agents as independent contractors throughout the state and are based here in Lincoln, Nebraska. Thank you, 

Mr. Moline for joining us today. 

Ms. Green, if you would proceed with your testimony.

STATEMENT OF PEGGY GREEN, GREEN’S PLUMBING, 

HEATING, COOLING AND REMODELING 

Ms. GREEN. I would be happy to. Thank you for inviting me. I 

am actually asked to also represent today Associated Builders & 

Contractors, and I will explain a little bit about that association. 

We also refer to them as ABC contractors. It’s a national association, and it represents 23,000 merit shop construction and construction related firms in 79 chapters across the United States. 

And here in Nebraska we do represent 240 member firms. Green’s 

has been a member since 1978. 

I would like to also say that I think I represent employees. Employees to me are my best asset, and I want to share a little story 

that prompted me to be willing to participate in something like 

this. We provide a physical for each employee before we hire them, 

part of our prescreening plan, and we also do drug screens. And we 

hired an employee that participated in our physical, and when the 

nurses called me, they said that this particular person had a fairly 

serious medical problem and that we would not be able to employ 

him unless something—some action was taken. 

And the problem resulted because he was not taking his medication, and the employee was not taking his medication because 

where he was at prior he was not participating in any type of 

health plan. He could not afford health insurance. His employer did 

not provide it, and he couldn’t afford prescription medication. We 

proceeded to negotiate and did hire the employee. He was able to 

join our health plan. We were able to pay for it, get him on our 

5

prescription drug plan which, by the way, is just $10 per generic 

drug and get him back on a wellness track. So he’s now part of our 

team, and we’re very pleased that we could do that not just for him 

but for what he contributes to our business. 

So that’s a little story I wanted to share with you because I feel 

I represent a lot more than just small business. 

I will go ahead and kind of go through a few things about my 

company. We are mechanical contractors. So I am representing the 

construction industry, and the construction industry is pretty 

small. My people do maybe a small service call in your home. We’re 

in people’s homes that have health issues as well. They might be 

sick, may not. We’re at construction sites that may be safe, may 

not be safe. And so we’re very much aware of the importance of 

wellness because we have people that are involved in a crew, and 

we’re working with teams. And if someone is not able to get work 

one day, then we’re not as productive as we should be. 

I am going to tell you a little bit about our costs, and I want to 

say that in the Lincoln environment, I am fortunate because I benefit from some of the larger major employers. I do provide insurance for my employees. 

Over the years we have had to change our approach to that. 

Being third generation, been at my employer—or in my company 

for over 35 years. We started out by providing full family coverage. 

That would include the entire family. Over the years it got too expensive. We went to finally providing insurance for the single employee. 

At this point we were taking advantage of the other employers 

in Lincoln, though, because we are a city government. We have the 

Capitol of Lincoln right here. So we have many of our spouses that 

are employed by the state, federal or county employers. We have 

three hospitals, three universities, and we have several headquarters of insurance companies here in Lincoln. So I benefit by 

the major employers, but that’s not what the advantage is for other 

people across the state of Nebraska. So I do have that savings. 

If I were to pay for all of my employees, there would be a substantial change in the financial condition of my company. But on 

the other hand, if I don’t pay for insurance for my employees, I 

have another challenge of not having healthy, well employees that 

can show up for work. 

I am going to move ahead because of my time. My insurance 

company—and I want to say good things about my insurance agent 

because he did help me with my testimony. On one of the pages 

it will show you some comparison of what my rates are, and it 

shows the increases. And they were very polite in providing me 

with some numbers here showing how over the years the rates 

have changed 18 percent, 13 percent, and 20 percent. 

Those increases every year, of course, they don’t compare with 

any of my other costs. That’s a lot of increases every year. And this 

year they’re predicting—or next year they’re predicting my rates 

will go up again anywhere from 15 to 20 percent. You have a chart 

in front of you that kind of shows that, a graph that I think will 

visually give you some kind of idea of what we look at, and especially if you want to look at the graph that shows monthly premiums that compares three years. 

6

You know, the ones that show some family—it looks like that. It 

shows this year anybody that is participating in my family coverage, that I am able to provide—do you see that? I am sorry. 

Mr. FORTENBERRY. Yes. 

Ms. GREEN. Okay. A family plan would cost $903. To me, I know 

some of my employees that’s probably about what they pay for a 

mortgage payment per month. So it’s a substantial part of their—

their annual expense. 

The next page, the bar graph, in order to maintain some of the 

premiums, which I am hoping you will review some of the costs 

later, we have had to make changes in what the deductibles are, 

out-of-pocket expense. We’re always having to shop insurance every 

year to try to make it as affordable to us as a small business but 

also to my employees. Like I said, I am no longer able to pay for 

the family plan. 

And as you continue with the packet, it shows the actual plan 

that we have and the different benefits. I am very proud to be able 

to say that what we provide for our employees is if they need to 

visit the doctor, they only have to pay $25, and, again, we’re encouraging them to see a doctor. It doesn’t do any good for me to 

provide health insurance to an employee that they can’t even afford 

to use. So the co-pay is $25, and then generic prescription drugs 

are $10. 

And on the final page it does show you—excuse me. Not the final 

page, but it continues to show you in these charts the cost comparisons, different premium, different policies they could purchase. 

The next chart will give you some ideas if you want to compare 

other carriers that I had choices that I could choose. And I could 

choose insurance policies that cost less. 

Mr. MANZULLO. Now, we have to choose to end your testimony. 

Ms. GREEN. In closing, I am very glad that this is happening because I am concerned about the future. The financial burden, the 

small businesses have it now, that is if they are even providing for 

their employees. And I think in the future we have to make some 

tough decisions what we’re going to do as other costs of doing business are arising as well. Thank you. 

[Ms. Green’s statement may be found in the appendix.] 

Mr. FORTENBERRY. Thank you for your testimony. And, for the 

record, please note that your full written statement from each witness will be a part of this formal record. 

Mr. Lanik?

STATEMENT OF BOB LANIK, ST. ELIZABETH’S REGIONAL 

MEDICAL CENTER 

Mr. LANIK. Thank you, Congressman, and thank you for the opportunity to speak before this committee on the—on the committee 

of small business on providing health coverage for employees. My 

testimony today will try to provide some insight into the drivers of 

costs. 

The issue of increasing health care costs is very complex, and I 

will only be able to scratch the surface during my testimony. 

Mr. MANZULLO. Bob, could you pull the mike closer to your 

mouth. 

7

Mr. LANIK. Sure. Thank you. I also am sensitized to the increasing cost of health care insurance as we have seen double digit increases in our own health insurance plan. 

The key drivers that I will talk about today are labor, supplies, 

pharmaceuticals, technology, regulation, defensive medicine, malpractice, increased utilization, and the practice of cost shifting 

which directly impacts the premiums paid by employers. 

In our hospital benefits and wages comprise 42 percent of our expenses. That’s pretty similar to other hospitals. Nationally, according to the American Hospital Association, there is an 8.1 percent 

of vacancies in registered nurses. These shortages have forced hospitals to provide higher wages. When vacancies can’t be filled by 

employment, at St. Elizabeth and other hospitals we use temporary 

staffing from agencies. At St. Elizabeth we pay a 70 percent premium for the cost of those agency nurses. 

Supplies is another area of rapid increases in cost. To give you 

an example of some of the devices that we’re providing patients 

these days, a biventricular pacemaker costs us 23,750 for some of 

our cardiology patients. A cochlear implant for a deaf person costs 

almost $27,000, and a knee implant can run from 5,000 to 8,500 

depending upon whether it’s made of metal or ceramic. And you 

may have noticed that the manufacturers are running TV ads marketing directly to the public promoting the ceramic model. 

During 1998 to 2003, prescription drugs accounted for about 18 

percent of the spending growth in health care. The federal government estimates during the 1990s 10 percent to 40 percent of the 

annual growth in personal health care spending was attributable 

to technology. 

Let me give you a couple of examples of regulation that costs the 

health care bills to rise. According to the American Hospital Association, in California new seismic standards will cost the hospitals 

an estimated $24 billion, and compliance with just a handful of 

HIPAA privacy requirements alone will cost hospitals in the nation 

up to 22 billion over five years. 

In a recent publication by Blue Cross/Blue Shield Plans, they report that rising malpractice insurance premiums are driving up 

provider fees especially in the areas of obstetrics and gynecology 

and surgery. 

The AMA in March of 2004 identified 19 states that they categorized as crisis states because of the availability and affordability 

of malpractice insurance. 

A related issue is that of defensive medicine. In a recent study 

published by the Journal of the American Medical Association, 93 

percent of the 824 physician respondents reported using some form 

of defensive medicine. 

And, finally, I would like to speak to the issue of the cost of the 

uninsured and underinsured and inadequate reimbursement by 

Federal and State programs that also drive up the cost of health 

care, particularly to other purchasers, including small businesses. 

5.6 percent of the patients in the United States that are hospitalized are uninsured. There is also a large number of underinsured. 

And we’re certainly pleased to provide charity care; however, there 

is a cost, and that cost needs to be passed on to someone. 

8

At St. Elizabeth Medicare pays us about 85 percent of the cost 

of providing care. Medicaid provides us about 65 percent of the cost 

for providing care. The way we have traditionally dealt with that 

is to shift costs to another payor. 

You can see that there are many factors that drive up health 

care costs. Again, I can only touch on these briefly with this time. 

But thank you for allowing me to testify this morning. 

[Mr. Lanik’s statement may be found in the appendix.] 

Mr. FORTENBERRY. Thank you, Mr. Lanik. We appreciate your insight. 

For the record as well, Mr. Chairman, without objection, the 

mayor of Lincoln, Coleen Seng, sent a welcoming letter. We would 

like to include that as a formal part of the proceeding. 

[Mayor Seng’s letter may be found in the appendix.] 

Mr. FORTENBERRY. Mr. Janssen?

STATEMENT OF CHARLIE JANSSEN, RTG MEDICAL 

Mr. JANSSEN. I would like to thank Congressman Manzullo, Congressman Fortenberry and Congressman Terry and the Committee 

on Small Business for recognizing that affordability of health care 

insurance is a pressing issue for small businesses. 

RTG Medical is a Nebraska-based nationwide temporary health 

care staffing company that began operations in 2001. And we agree 

that affordability of quality health care insurance has become an 

issue of expanding our own business in Fremont, Nebraska. 

In 2004, we asked six different insurance companies for competitive bids for health insurance. At the time of the bid, November of 

2004, we had 39 employees eligible for insurance of which 18 were 

on our PPO plan that was administered through United 

Healthcare. We got the following response from the following companies: 

AMS, declined a bid due to low participation. 

Coventry, declined a bid, no explanation. 

Humana, a non-competitive bid. 

United Healthcare, our 2003 plan carrier, bid, 90 percent increase over their own 2003 rate. 

Principal Financial, bid, 93.5 percent over our 2003 rate. 

Blue Cross/Blue Shield, bid, 96.8 percent over our 2003 rates. 

With few options, we stayed with United Healthcare’s PPO plan 

at the 90 percent increase, and we also offered a qualified high deductible health plan which had premiums that were 43 percent 

higher than our 2003 PPO plan but also allowed employees to open 

a health savings account which they have taken advantage of. 

As of June 2005, we currently have 100 eligible employees with 

35 participants in our plan. One factor that led to the increase in 

our number of eligible employees from 39 in November of ’04 to 100 

today is that the waiting period of 90 days was adjusted for RTG 

Medical employees, plus the business has grown exponentially over 

the past year as well. 

The participation rate in the RTG plan is also affected by the 

fact that a spouse may have a plan that provides family coverage 

at a lower cost than we can provide, and our traveling employees 

that work across the nation also work on 13-week contracts and 

9

may obtain their own individual insurance based on sex and age 

at a lower rate than our composite rates could offer to them. 

The temporary medical staffing business is a highly competitive 

one which makes it very difficult to pass the cost increases on to 

our client facilities. Insurance costs have been spiraling out of control for several years. We have determined the only way we can 

control costs for the company is to limit our reimbursement to employees, in essence, passing the cost increase on to employees and 

provide them the opportunity to control their costs through wise 

usage of health care providers. 

Rising insurance affects—rising insurance costs affect the ability 

of small businesses to hire talented individuals. They need to grow 

to grow their business. Larger companies have the option of selfinsuring medical costs and just paying the insurance company for 

administration. This allows larger companies to deliver a lower cost 

insurance benefit to an employee than a small business can. 

In some ways small businesses are subsidizing the rates or costs 

of larger companies by paying higher rates for individuals based on 

group size, providing better insurance, buying groups for small 

businesses where they can pool their employees to buy down a rate 

that could assist in this. This would provide access to more carriers, and that competition would push rates down. 

In our industry, affordability of health care is a major issue for 

our traveling employees. COBRA provides portability for 18 

months, but it is at a great administrative cost to the small business, in our case requires a small staff to comply with those regulations. We would like to see COBRA compliance become the responsibility of the insurance provider. The small business would only 

have to notify the insurance provider to change the employment 

status and all notifications, billings, and collections would be taken 

care of by the insurance company. The small business gets no benefit from providing COBRA. It is a cost. 

The employee should have affordability of insurance. The insurance company is the entity making the insurance premium, and it 

would seem appropriate to push the cost of administration to them. 

If this committee were looking for a way to make an immediate 

impact on helping small business, this minor change would have a 

tremendous impact. It would allow our extremely small and overworked administrative employees more time to concentrate on 

growing our business and less time spent conforming to strict 

COBRA compliance regulations that ultimately benefit the insurance companies. 

It seems a little suspect myself that United Healthcare would 

raise our premiums 90 percent and then expect us to invoice and 

collect premiums from their clients, and if we don’t do that, face 

huge fines. We would like to point out that we have nothing 

against large corporations or insurance companies. We are simply 

hopeful that we can all work together in order to find a solution 

in making health care insurance more affordable for all involved. 

We believe a potential employee should base their employment 

decision upon the direction and integrity of the company as opposed to the health care plan and co-pay of a company. 

Mr. FORTENBERRY. Thank you, Mr. Janssen. We appreciate you 

coming today, for your insightful testimony. 

10

Ms. Durham.

STATEMENT OF DEBI DURHAM, SIOUXLAND CHAMBER OF 

COMMERCE 

Ms. DURHAM. Mr. Chairman, Congressman Terry, Congressman 

Fortenberry, I also thank you for this opportunity. Siouxland is a 

regional banner branded to include the tri-state area of Sioux City, 

Iowa, South Sioux City, Nebraska, and North Sioux City, South 

Dakota. With a combined population of approximately 150,000, our 

region functions largely as a single economy operating across state 

lines in economic development, marketing, transportation, and 

long-term strategic planning. 

In Siouxland our employers are burdened by dramatically increasing health insurance costs. Many of our small businesses are 

currently faced with rather unpalatable choices of reducing the 

work force, reducing employee benefits, passing on increasing 

health insurance costs to their employers, employees, or even canceling insurance coverage in order to remain viable. 

Many factors influence this trend already spoken of today. With 

the aging of our local population, growing number of working uninsured, and an overall increase in the number of people lacking 

health insurance, the situation in Siouxland has grown from disconcerting to critical. 

Like you, we also realized this would be a difficult and demanding process requiring innovative and collaborative approaches. Our 

Chamber of Commerce brought together a coalition of community 

health care providers, business leaders, and governmental partners 

to develop a multifaceted approach to address both escalating 

health insurance costs and improved access to affordable health 

care in Siouxland. 

In the 2004 Siouxland Laborshed analysis, our research demonstrated that certain benefits offered in lieu of higher wages could 

be the catalyst driving an employee to change employment. In fact, 

the survey confirmed that 72.8 percent of respondents would be influenced to either maintain or change employment if the employer 

would share the premium for health insurance. This data confirmed that those businesses that provided employee health insurance plans enhanced their recruiting efforts and maintained a more 

stable work force. 

In the essence of time, I will highlight a few strategies that capture the collaborative tactics of how we believe affordable health 

care can be provided for small business employers and the self-employed. 

First of all, bundling of insured lives. Provide true purchasing 

pool for small businesses to band together as a purchasing block to 

lower premium costs. Of the Chamber’s 1,100 members, 56 percent 

represent small businesses with less than 10 employees, a number 

that makes it difficult to find a competitive plan. The support we 

would request is allow for a tri-state association of insurance purchaser plans to be developed. 

Gap health care coverage for the working uninsured. Our concern 

for the growing number of working uninsured in our community 

led us to the Muskegon, Michigan Community Health Non Profit 

11

Program, a plan that markets to the uninsured small business population. The plan instills personal responsibility with a three share 

pay model divided so the employer pays 30 percent, the employee 

pays 30 percent, and the community pays the remaining 40 percent 

funded by the disapportionate hospital fund. 

Coverage is comprehensive, less a few catastrophic care items. In 

fact, at times the coverage is non- conventional and holistic in its 

approach. Costs are managed with the utilization of case workers 

from the local nursing school assigned to individuals covered in the 

plan, a true managed care oversight. 

The Siouxland region is seeking a pilot project status with an appropriation to implement a small business coverage plan designed 

to narrow the gap between public and private insurance coverage 

patterned after the Muskegon model. This plan would make health 

care insurance obtainable for the growing number of working uninsured in our region and encourage healthy choices by the consumer. 

Health savings accounts. The business community is intrigued by 

the consumer directed component of the health savings account initiative. However, implementation in the first two years for small 

businesses is a hurdle that many employers are unable to overcome 

making greater utilization difficult. Price savings for employers is 

not significant enough to create an implementation incentive. So 

we would ask to increase utilization of the health savings accounts 

by providing for significant tax incentives for the employers, and 

also require financial participation by the employee. 

Medicare reimbursement. The tri-state region continues to experience a low Medicare reimbursement for all aspects of medical 

care, despite providing demonstratable high quality health care. It 

has become a vicious cycle. The more the government payers reduce what they pay, the more the health care providers try to shift 

it to the private payers. 

The support that we would request is to implement a tri-state 

Medicare reimbursement rate for the Siouxland region. At the current Nebraska rate, the highest in the region today, include quality 

monitors and patient outcome measures as variables in the Medicare reimbursement formula, increase compensation rates for providers who insure better outcomes. 

Thank you for this opportunity to significantly raise the awareness of the difficult plight of our small businesses in assessing affordable health care in our communities. 

[Ms. Durham’s statement may be found in the appendix.] 

Mr. FORTENBERRY. Thank you, Mrs. Durham. We appreciate 

that. As you can see, Mr. Chair, the chairman of the Siouxland region was very active and definitive. Thank you for your insightful 

testimony.

STATEMENT OF JOHN MILLER, OXBOW HAY COMPANY 

Mr. MILLER. Yes, good morning, and thank you for allowing me 

to come and speak a little bit about a few of our small companies’ 

problems. 

As Mr. Fortenberry was explaining to you at the beginning, 

Oxbow Pet Products is a small pet food company that specializes 

12

in proper nutrition and supportive care for small pet herbivores, 

better known as rabbits, guinea pigs, chinchillas, and a few other 

similar exotic pets. 

Our company is located close to Murdock, Nebraska, which is a 

small farming community of 250 people. The business is located on 

our family farm from which the business evolved starting in our 

garage, then moving to our old barn. Our business is now housed 

in the refurbished barn as offices and in two other new buildings 

which serve as production and the warehouse. 

The pet food idea started about 12 years ago evolving out of my 

alfalfa hay business, which was a large part of our farming operation at that time. We have experienced phenomenal growth over 

these last 12 years. We started with just one little bag of alfalfa, 

and now we have 22 products that are distributed all over the 

world. 

We hired our first employee seven years ago and now employ 

over 40 people. We are the largest non- governmental employer of 

women in our county. Our payroll surpasses $1 million per year, 

most of which is paid into the surrounding community. 

The pet food business grew with part-time help from neighbors 

who were looking for part-time work. Most of these early part-time 

employees were able to get health insurance through their spouses 

at other locations. Even though these people were always interested in health insurance as a benefit, the lack of insurance in 

those early years was not too big of a problem. 

As the business grew, we needed more and more full-time employees for the continuity that full-time employees bring to the job. 

Our payroll has had to increase dramatically to attract the caliber 

of people that we need to succeed. Full-time people expect and need 

health insurance. This has been a huge issue for us and the survival of our small company. 

Early efforts to obtain small group insurance that would work for 

a large percentage of our employees plus be affordable for our 

small company were very frustrating. We have had health insurance now for a little over two years. 

During those early periods of determining what we were going to 

offer, it was very confusing for a small family business to sort out 

the options that are available and which of those options of are 

good value. We really didn’t have the experience that we needed to 

know what was good and what wasn’t, plus we had a couple of 

early large claims into our small group plan which compounded our 

problems. 

Approximately one year ago we changed health coverage to a 

plan that was more inclusive for all of our employees but which 

also carried a very high deductible that was designed to be covered 

by a health savings plan. We were assured that by going to this 

high deductible, which we understand is a hardship on our employees that we wish was not there, that our premium would remain 

basically unchanged for a period of two to three years. 

This month, only one year into our coverage, we just received notice that our premium was going up 12 percent for the coming year. 

I can guarantee that double digit growth in our health insurance 

premium is not going to be long-term sustainable for our little company. 

13

As owners, my wife and I want Oxbow to be a special place to 

work. We have worked hard over these 12 years to create a culture 

of caring for our employees. Obtaining and expanding our benefit—

our employee benefit package is a high priority for us. Last year 

we added additional PTO days that are more easily obtainable, a 

simple IRA and life insurance in addition to our new health insurance that revolves around this health savings account. In order to 

get the monthly premium down to an affordable price, we did have 

to sacrifice our dental plan and go to a $2,000 deductible plan and 

add the health savings account option. 

We feel sometimes we are taking one step forward and two steps 

back, a more affordable offering but less coverage. We want rural 

Murdock, Nebraska to be a great place to work and raise your family. We want Oxbow Pet Products to be a long-term employer in 

rural Nebraska for decades to come. It will be imperative that solutions be found that will help to make health insurance affordable. 

[Mr. Miller’s statement may be found in the appendix.] 

Mr. MANZULLO. I guess I am going to be the bad guy and say 

you’re out of time. 

Mr. MILLER. Is that right? 

Mr. TERRY. It goes quick, doesn’t it. 

Mr. MILLER. Sorry. 

Mr. FORTENBERRY. Mr. Moline.

STATEMENT OF ROBERT MOLINE, HOMESERVICES OF 

NEBRASKA 

Mr. MOLINE. Thank you, Mr. Chairman, committee members for 

allowing me to testify today before you in on small business health 

plans. I have been involved with the real estate brokerage business 

for over 18 years. Currently I am involved with the real estate brokerage that employs over 600 real estate agents who are independent contractors across the state of Nebraska. Essentially, each 

of these real estate agents are a small independent business with 

the same needs and desires of any other business in the United 

States today. 

Unfortunately, health insurance for them is non- existent, 

unaffordable, or even unavailable. The National Association of Realtor’s data shows that one out of four realtors have no health coverage, and the number of realtors without health coverage has doubled in the past eight years. Seventy-four percent of realtors without health insurance said the reason they lack it is because of high 

cost. 

Twice in my career I have attempted to provide health insurance 

coverage to our real estate agents through some form of modified 

group type plan. I was turned away by most insurance companies 

since our real estate agents were not salaried employees of a real 

estate brokerage. However, we were able to contract with a health 

maintenance organization for our real estate agents if we included 

our salaried employees. This health contract worked reasonably 

well for several years until an HMO was purchased by a large insurance company. After the sale of the health maintenance organization, we were informed that we would no longer be allowed to 

put new real estate agents on our plan. As a consequence, our 

14

health plan lost participants and started shrinking. Health insurance premiums increased substantially, and it led to adverse selection because the healthy participants in our health plan found insurance elsewhere. 

We were unable to receive any other health insurance quotes because of the small number of real estate agents that were remaining on our plan. Eventually, we were forced to end the health insurance plan because of high costs and move to different health insurance for our salaried employees. 

Mr. Chairman, I was responsible for telling 16 real estate agents 

and their families that they no longer had health insurance. That 

was one of the most difficult things I have ever done in my life. 

They had fear, despair. They didn’t know where to go because there 

were no opportunities for them. 

So what do we do in the future to correct this problem? We need 

to pass legislation like the Small Business Health Fairness Act, 

which would provide small businesses and the self-employed access 

to the same health benefits that labor unions and large corporations currently enjoy under federal law. 

I’ve listed out 10 points. I would like to share some of them with 

you. This plan should create federally-certified small business 

health plans, sometimes also referred to as association health 

plans. 

2, under SBHPs small businesses could band together through 

their professional or trade organizations to either purchase coverage from established insurance companies, or if they cover 

enough participants, they could self-insure. 

SBHPs would be subject to the same—they should be subject to 

the same federal and state regulations by which large companies 

and unions are compelled. 

They could reduce health cost insurance—excuse me. SBHPs 

would reduce the cost of health insurance coverage by allowing for 

the creation of larger pools of insured workers, thus increasing the 

bargaining power of these individuals. We should only allow legitimate industry or trade organizations that have been in operation 

for a number of years to sponsor SBHPs, and they should be certified by the US Department of Labor and be required to meet 

some certification. 

SBHPs should be subject to regulation by state insurance regulators and the US Department of Labor. 

SBHPs should be subject to the Health Insurance Portability and 

Accountability Act, HIPAA, which makes it illegal to deny coverage 

to any eligible participant based on health status of an individual 

employee or employer. 

And I would agree with the person that testified earlier that 

some parts of HIPAA are a little bit overbearing and could be made 

more efficient. 

SBHPs would reduce the cost of health insurance coverage by allowing for the creation of larger pools of insured workers, increasing the bargaining power of these individuals creating options we 

have never had before, lowering per capita administration costs, 

spreading risks over a larger pool of participants, making use of existing marketing/communication mechanisms of associations. 

15

Allowing associations to create groups of insureds across state 

boundaries will allow associations to create larger groups, spread 

the risk, and increase more bargaining power. 

In the end, the congressional budget office estimates that small 

businesses obtaining insurance through SBHPs will enjoy premium 

reductions between 9 and 25 percent. That’s huge. That’s huge for 

us. 

The continued problems with rising health insurance costs are 

not going to be solved today by passing Small Business Health 

Plan legislation. However, I do believe it will provide a good first 

step allowing small businesses to have new tools to combat rising 

health insurance costs and increased access to insurance. 

The time to move forward is now. We have seen great debate on 

this issue time and time again through several sessions of Congress, and it’s time for everyone to come together, clarify the remaining issues and find a solution. Each day the debate continues, 

many employees of small businesses are going without health insurance and just hoping that a major health insurance concern 

does not land at their doorstep that day. 

Thank you for allowing me to testify. I would be happy to answer 

any questions you might have. 

[Mr. Moline’s statement may be found in the appendix.] 

Mr. FORTENBERRY. Thank you so much, Mr. Moline, for your testimony today. Mr. Chairman, if it’s acceptable to you, I will ask the 

first question. 

By the way, for those of you who may be interested in submitting 

questions to us who are with us in the audience today, you can email my Web site. I will give you that Web site address. It’s 

JeffFortenberry.house.gov. And then we will try as best we can to 

answer your questions. That Web address will get you to our e-mail 

address. 

Mr. Lanik, if I could start with you. You did a very comprehensive job of obviously reviewing the main drivers of ever increasing 

health care costs. This is going to be a very difficult question. If 

it’s impossible to answer, I completely understand. But could you 

assign a percentage to that list to weight each one of those variables in terms of their impact on health care costs? 

And, secondly, it’s related to something that several panelists 

have said, including Ms. Green, in terms of cost shifting, and overutilization as another one of the panelists had suggested, and then 

the solutions that are out there that again involve the consumer of 

health care a little more directly in controlling their own cost, how 

have you seen that—have you seen that as a successful way in 

your experience in administering a hospital in which again the consumer of health care is in a better position to help you and them 

manager costs? 

Mr. LANIK. That’s— 

Mr. FORTENBERRY. Is that narrow enough for you. 

Mr. LANIK. Just help me along. I did have government references 

to two of the drivers. One was pharmaceuticals, I believe, and one 

was technology. And I think technology, depending upon the year, 

was 10 to 40 percent of the inflation. And I believe that the government office of—I think it’s Medicare/Medicaid services actuary ofVerDate 0ct 09 2002 15:57 Oct 21, 2005 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 G:\HEARINGS\23175.TXT MIKE
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fice predicted 18 percent of that was for prescription drugs. So 

there is 38 to 68 percent right there. 

That’s a very difficult question. I think utilization is a bigger 

number than we can get our hands around because as we age particularly we are consuming more resources. I think about the lifestyle issues that we deal with, obesity and smoking being two of 

the largest, and I see what happens in our hospital every day. I 

think about our own employees every day. 

So I think that’s probably a very significant driver in the increase in health care costs. I don’t have—I don’t have a way to 

quantify that. 

Mr. FORTENBERRY. I was speaking with an emergency room physician in a rural—on staff of a rural hospital. He told me that approximately 50 percent of the patients that he sees in the emergency room, the issue could be dealt with at home. Does this track 

with your findings as well. 

Mr. LANIK. That certainly is an issue, and our—a couple things 

are happening. Sometimes our emergency departments are being 

used for routine care where they could have made an appointment 

at the physician’s office or found a less expensive urgent care center to receive care. 

The other thing that happens is that people that don’t have insurance sometimes will put off care, and then when they do show 

up to the emergency department, their situation is much more 

acute and it’s a much more expensive intervention. But that— 

Mr. FORTENBERRY. I guess that’s under cost shifting, and somebody is going to pick up the cost somewhere. 

Mr. LANIK. There are costs to providing care. We do provide charity care. In some sense, maybe if there was a way to provide some 

support to underinsured, uninsured, we might be able to then substitute the cost of helping there because we are providing it now 

in the way of charity, and we are cost shifting. 

Mr. FORTENBERRY. If you would make a comment regarding overutilization. Again, I think what you have seen in the industry is 

businesses being effectively forced into cost shifting or sharing that 

burden with the employees because it’s simply not affordable. But 

does that lead to actually some better outcomes, better decisions 

that are made by consumers if they’re in control of their own dollars, such as you mentioned the health savings account. 

It’s a balance there, obviously. You’re trying to provide the coverage that people need but shifting some cost to employees and 

helping to manage that through HSA is another intervention primarily. 

Mr. LANIK. I think personal participation is very important in 

whatever health care arrangements we have because it does force 

people to think a little bit more about the options that they use, 

how often they go for care, where they go for care. So whether 

that’s deductibles, co-pays, some participation, I think, is—I think 

it would be a very important piece of any kind of health care plan. 

Mr. FORTENBERRY. Thank you. 

Mr. MANZULLO. I just have a couple comments. 

Mr. Lanik, we have had hearings on this topic now five years, 

and you’re the only witness that I can remember that’s talked 

about the high cost of technology. And the cost of technology has 

17

always vastly outpaced the increase in the cost of living. And based 

upon your factor here that technology increased amounts between 

10 and 40 percent, that means you start out with the basis that 

the cost of increase in health care premiums will always vastly outpace the cost of living. You have to start there. That means you 

have to look to different media or different forms as, I guess, a way 

to bring the cost of health care under control. Because if you don’t 

use the best, you know what happens. The patients aren’t getting 

the best that’s available. 

The other comment I had was Debi Durham, my district had the 

first pilot of the tri-care or of the three share, and that’s down to 

two share. You can’t have a government component. You just can’t 

get a government subsidy to run the health care system because 

it’s unreliable, it will not last, there is no assurance, and Washington is broke. 

In the Rockford, Illinois model, a small employer qualified only 

if that employer had not been able to offer health and accident insurance for one year. That was done purposely to get people from 

switching from the other plans to this. It’s modestly successful. 

Certainly not—you know, not what everybody wants. The area 

we’re really starting to see in Congress is Pete Hoekstra’s district 

on the western side of Michigan where people came together on 

that. But it’s an innovative approach, and it’s certainly worth pursuing. 

The other thing that I would like to say is that we have never 

had a hearing with so many people attending either in Washington 

or any field hearing throughout the country. This is the largest 

number of people. (Applause.) It’s obviously a testament to Congressman Fortenberry, plus the interest that has been peaked by 

this. 

The other thing I would suggest is this. We held a hearing in my 

hometown of Rockford, Illinois, and a man by the name of Phil 

Bartman, who is a Cellular One dealer, testified he had gotten a 

bill with a dramatic increase for health and accident insurance for 

his employees. Sitting in the audience was a fellow by the name 

of Scott Shelley from Greenwood, Illinois in the US district I represent. He came up to him afterwards and said have you thought 

about getting a second carrier to write your deductible. 

I have seen rates of insurance vacillate based upon the salesman 

that you talk to. And I am not here to take a book away from any 

salesperson, but I would shop, shop, shop. There are so many different plans out there available. In fact, sometimes you can get a 

cheaper rate from a salesperson who works directly for a company 

than from an independent agent. Again, I am not criticizing anybody. I am just saying that it’s very interesting how these rates 

will vacillate throughout the country. 

I don’t want any independents to get upset with me because 

sometimes independents can shop and get a better price than people that are directly related to a company. Nobody is doing anything wrong. It’s just weird the way that pricing is done. 

Mr. TERRY. All right. Thank you, Mr. Chairman. 

Ms. Green, I am going to start with you, and just if you can go 

down. I ask this to all of the small businesses that I meet with, 

particularly when we talk about health care costs. I am just curiVerDate 0ct 09 2002 15:57 Oct 21, 2005 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 G:\HEARINGS\23175.TXT MIKE
18

ous, what percentage of your budget do you reserve for health care 

in your business? And to put it in further context for us, compare 

that to whatever your—10 years ago, one year ago on just a percentage that you spend on health care. 

Ms. GREEN. I am going to answer that by saying that it’s just out 

of the budget. I mean, you can’t budget for something that’s going 

to increase 20 percent and every year you try to reallocate it. We 

base it on our labor burden and what we can afford because we are 

a construction company where we’re trying to bid projects against 

other competitors that don’t even offer health insurance. So we try 

to base it on what we can afford for our labor burden and be competitive. 

So this year, for example, we just hit a mark where we estimate 

that per employee we’re going to pay about $300 per employee per 

month, and that gives us a labor total that we’re averaging what 

we can afford. 

In terms of other costs, they’re rising so high it’s kind of hard 

for me to answer as well. This year we have had the burden of gasoline fuel costs. As a construction company, it’s been very difficult. 

I have a fleet of over 30 trucks. My gasoline costs have increased 

tremendously. 

We have health insurance, workman’s comp. Budgeting right 

now—I didn’t bring those numbers. Let’s just say in my company 

it’s in the top four. That’s including, like I said, labor, other business insurance, liability insurance. It’s in the top four. 

Mr. TERRY. All right. I know you represent a whole service entity, but you still have employees. What do you think. 

Mr. LANIK. Our benefit costs are 27 percent of our wages and salaries, and health is clearly the largest. The second would probably 

be our contribution to the retirement plan. But health care is clearly the largest and the one that drives the increase the most. 

Mr. TERRY. Mr. Janssen. 

Mr. JANSSEN. We always try to hold it within 20 and 25 percent, 

and sometimes that makes us do some cost shifting. And one of the 

best things we did last year were the HSA accounts, although I 

have feared that a lot of our younger employees are not taking full 

advantage of those accounts. They’re getting the—they’re getting 

on the plan. 

Mr. TERRY. I am going to come back to you and John about that. 

Debi. 

Ms. DURHAM. Ours is running between 25 and 30 percent, and 

we’re seeing double digit increases and have for the last few years 

having less than 10 employees. So what we are doing is basically 

backloading the plan, and I pray every day that none of my employees actually have to use it because of the high deductibles and 

larger co-pays. 

Mr. MILLER. Okay. We have approximately 25 of our employees 

who take our health insurance, and that cost is a little over 10 percent of our total payroll. 

Mr. TERRY. I am sorry. I missed that. We had a slight interruption up here. One of the lesser known members of the house of representatives is here. 

Mr. MILLER. So I suppose we get to do this all again. 

19

Mr. TERRY. Yes. Please start over. John, give me what you feel 

is a ballpark of your percentage. 

Mr. MILLER. We’re paying about 12 percent of our total payroll 

in health insurance benefits or in costs. But we only have about 52 

percent of our employees that are taking health insurance. We 

have—oh, a fairly large percentage of our employees are Hispanic 

who don’t necessarily want to take the insurance. 

Mr. TERRY. Very good. Bob, is there any way to calculate for your 

entity with the independent brokers. 

Mr. MILLER. Mr. Terry, I can probably do a good job on our salaried employees. It’s been between 10 and 25 percent a year in the 

last 10 years. When you asked that question, sir, I need to modify 

that answer and also remind you that during that time, we have 

taken substantial increases in deductibles and a watering down of 

the actual benefits that the health insurance pays. 

Mr. TERRY. Good point. 

Mr. MILLER. To keep it in tier, things that our employees can 

pay. And during that time also, we have had to shift more costs 

to our employees. On the independent contractor side, it really 

comes down to accessibility to health insurance rather than what 

it costs. It’s just not there because they don’t fit into— 

Mr. TERRY. Individual and family policies are the hardest. In 

fact, some of our own Nebraska companies have gotten out of that 

business mostly because of the regulatory burdens. 

Go ahead. Thank you. 

Mr. MANZULLO. Do you have some questions, Coach. 

Mr. OSBORNE. I don’t have a mike. You won’t let me talk. It’s 

hard to get the microphone away. 

I just want to say a couple things. First of all, thank Don for 

coming. Don has been a good friend, a great friend of Lee’s and 

mine, and also mention that Jeff is doing a good job of representing 

you, all of us here about the cost of health care. It’s gone out of 

sight. 

I know you’ve talked about association health plans, at least I 

am assuming you have at this point. One thing that you may not 

have talked about, which is of great interest to me, is the issue of 

reimportation of drugs. Have you talked about that? 

Mr. MANZULLO. No. 

Mr. OSBORNE. Okay. The reason that’s so important is the cost 

of drugs is going up about 18 percent a year. It’s a huge portion 

of our health care. And the House did pass a bill calling for reimportation regulation where a pharmaceutical company could not 

sell drugs at a higher price than what they charge in Canada, 

which, generally speaking, is 40 to 50 percent higher than in the 

US. And so I am continuing to push that. I think most of us here 

are in favor. I can’t speak for the other gentlemen here. 

But one of the problems we’re running into, there are twice as 

many lobbyists from the pharmaceutical industry in Washington as 

there are members of Congress. So you add that up, and you see 

what the problem is. But it just doesn’t make sense because a lot 

of your health care costs are bound up in the price of drugs. 

And the other thing I just wanted to mention real quickly is the 

importance of electronic medical records. I think we could all save 

a lot of money if that was implemented. 

20

And so not having heard your testimony, I am at a little bit of 

a disadvantage, but I guess I can say we feel your pain. We understand what you’re going through. My family is a small business 

company, and I hear this from my brother all the time. So I think 

we’re, all of us, committed to do whatever we can. It’s a difficult 

playing field right now. 

So I will turn it back over and not ask any other questions. 

Thank you. 

Mr. MANZULLO. You come in and you stir the pot, huh, Coach? 

Anybody want to ask the Coach’s favorite color. 

Mr. FORTENBERRY. Again, this has been extraordinarily insightful, and one of the difficulties with this type of hearing, even in 

Washington, is the limits of time. So we only have a few more moments left. 

And all of you have pointed out specific things that are impacting 

you but also that potentially could be done. I think there is an important underlying point that is spread through all of your testimony, is that health insurance is a big sociological factor. In other 

words, people are making decisions about what they want to 

produce, where they want to make their livelihood, how they want 

to use the fruit of their own labor based upon not a desire of heart 

but where they can potentially obtain health insurance. 

As you mentioned, you have spouses shifting the cost. You have 

one spouse being employed with areas of coverage that are traditionally more stable, such as the government or larger employers, 

making, in other words, economic decisions based on benefit, not 

based upon necessarily where a person would choose to use their 

talents if the playing field was level. 

I think all of you have pointed out some of those types of sociological factors. You see this very much in farm communities as well 

where one spouse may have to drive 30, 40, 50 miles simply to be 

employed to get health insurance coverage. So that is a very big 

factor in rural America. 

Mr. MANZULLO. Jeff, let me exercise my prerogative and close the 

hearing. Is that okay with you. 

Mr. FORTENBERRY. Absolutely. 

Mr. MANZULLO. Again, we want to thank you all for coming. 

Let me take a couple minutes. I want to share one thing with 

Congressman Fortenberry, what he has meant to me on the small 

business committee. Jeff also serves on the international relations 

committee. Sometimes people say, well, what does that got to do 

with the price of corn? A lot. But what does that have to do with 

Lincoln, Nebraska and the rest of the counties that you represent? 

I have a rural area, and also I am on leave of absence from the 

international relations committee. 

Jeff has done something extraordinary in going to Iraq with this 

war going on. It’s extremely important that members of Congress 

obviously concentrate on the issues that are dear to you, health 

care, agricultural issues, and Jeff does an excellent job on that. But 

one of the reasons that he is on the international relations is that 

he’s one of the people that has to do the intensive studies, make 

the marks, and lead all of us into the very difficult positions, decisions as to the next theatre of conflict where young men and 

women may have to take up arms. So that’s the most difficult part 

21

of being a member of Congress is voting to send these young people 

off to war. 

Jeff went to Iraq because when he faces you, the people that he 

represents, he wants to be able to look you in the eye and say I 

went there, I seen what’s going on personally. And that’s important 

when you have children and grandchildren that face the prospects 

of going overseas. 

So, Jeff, I want to take the time to thank you for your distinguished service after being in Congress just a very short period of 

time. You’re a pup compared to me. And, Coach, I want to thank 

you for your great service. And Lee as well, you are all doing a tremendous amount of work. We have 19 members— 

[Applause.] 

Mr. MANZULLO. These people represent you exceedingly well. 

We’re going to have to close. We’re going to do a little press over 

here, and then we have to be out the door at 12:10. I am on my 

way from here to Dayton, Ohio where we have to do a manufacturing conference and then back to Washington where we have to 

do war on Tuesday evening with the votes again. Thank you again 

for coming here, and this hearing is adjourned. 

[Whereupon, the committee was adjourned.]

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29


23175.003
30


23175.004
31


23175.005
32


23175.006
33


23175.007
34


23175.008
35


23175.017
36


23175.018
37


23175.019
38


23175.020
39


23175.021
40


23175.022
41


23175.012
42


23175.013
43


23175.014
44


23175.015
45


23175.016
46

Æ


23175.025